demand generation vs lead generation funnel infographic
Demand vs. Lead Generation

Written by Brittany Degnan

March 25, 2024

The casual interchange of terms like lead generation and demand generation in business often blurs their distinct roles, confusing their purposes. Whereas bottom-of-funnel tactics focus on generating leads derived form an established demand for a product or service, demand generation focuses on increasing or creating demand for a product or service through awareness, education, and nuturing. A strategic marketing approach may focus on one or the other depending on the business model and go-to-market strategies, but often encompasses a combination of both lead and demand generation tactics. However, understanding the distinction between lead and demand generation is essential for developing a winning inbound marketing strategy and driving business growth. In most cases, businesses earlier in their development should prioritize lead generation, gradually integrating demand generation into their brand’s marketing strategy as their assets and marketing collateral mature. An important note: lead generation may function without the need for demand generation, but there is always a lead generation component involved in strategies that employ demand generation; eventually the leads need to be captured! Properly utilizing both strategies creates a multiplier effect, harnessing the strengths of both approaches for a comprehensive and effective marketing plan.

Looking vs Seeking: Push and Pull Strategies

A key distinction between lead and demand generation lies in “Looking” and “Seeking.” Lead generation involves placement and ensuring that a product, service, or brand is found by an audience that is actively seeking solutions. In contrast, demand generation introduces a product or solution to a problem that the audience may not already know about or properly understand. In essence, demand generation puts the idea in the audience’s head, and lead generation tactics get a business in front of users who are actively seeking their services. This can also be articulated as a push vs pull strategy, not too dissimilar to the traditional pull vs push strategies advertisers have employed for over 100 years. Unlike lead generation, which caters to those actively seeking, demand generation aims to generate curiosity, understanding, and anticipation among potential customers who were not formerly searching for a specific offering. Understanding and strategically combining both approaches is an essential “growth hack” for a comprehensive inbound marketing strategy.

demand generation webinar

educating an audience through a webinar is an excellent avenue for increasing demand for a product or service

lead generation plumber google search

search engine advertising is typcially associated with lead generation

Lead Generation: Tapping into Established Needs

Lead generation assumes an established need, a volume of searches, or potential customers actively seeking specific business services. This strategic approach involves utilizing various techniques such as SEO, advertisements, and search marketing to reach users who already express a need for particular products or services. Businesses engaged in lead generation aim to connect with potential customers by strategically deploying links, graphics, and detailed explanations of their offerings through methods like web forms and online purchases. Through these targeted efforts, the goal is to capture the attention and interest of users actively searching for solutions, thereby driving conversions and fostering a direct connection between the business and its potential clientele.

The Search Advertising Connection

In many instances, businesses opt for search advertising as a means of lead generation. This choice often involves utilizing platforms such as Google and LinkedIn, recognizing their significance in targeting users actively searching for a specific product or service. Lead generation’s core lies in reaching users who have already expressed a need, making it an influential method for driving conversions. By leveraging the reach and precision of search advertising on prominent platforms, businesses can strategically position themselves in front of an audience actively seeking solutions. This increases the likelihood of converting potential leads into satisfied customers. The inherent power of lead generation, as facilitated by search advertising, lies in its ability to align with the existing needs of the user, creating a seamless path from awareness to conversion.

Demand Generation: Educating the Audience Early

Demand generation, on the other hand, operates further up the marketing funnel, strategically concentrating on early-stage interactions. In demand generation, the advertiser or company adopts an approach to educate the audience about the necessity for their product or service. This involves creating awareness well in advance, even before a specific need arises within the potential customer. The objective here is to sow the seeds of interest and understanding, fostering a proactive relationship between the brand and its target audience. By proactively engaging with potential customers early in the decision-making process, demand generation lays the groundwork for future conversions. It cultivates a brand presence that extends beyond immediate, transactional needs.

Real-world Examples

Consider the difference between advertising plumbing services and promoting a tankless water heater as telling two stories. The first relates to lead generation, assuming customers actively seek plumbing services. The second necessitates more effort in demand generation, as it tells a new narrative about a product they might not actively search for, such as new or less essential products/services.

Let’s use our podcast studio, Witcraft, in Columbia, SC, as another example. Here, demand generation is essential, given that potential listeners might not be aware of or actively seeking podcasting services in the area. The studio must then leverage platforms such as LinkedIn, Meta, or TikTok as effective communication channels for storytelling. By actively informing and engaging potential listeners, the studio aims to create awareness regarding their podcasting services’ availability and unique benefits.

The Integration of Lead and Demand Generation

When combined, lead and demand generation function independently, creating a powerful multiplier effect. Starting with lead generation establishes a solid foundation, ensuring potential customers are aware of a product or service. As the audience grows, demand generation opens up the funnel to a larger audience, introducing the brand to those who may not have been actively seeking it. This strategic combination harnesses the strengths of both lead and demand generation for a comprehensive and effective marketing plan catering to diverse customer behaviors and preferences.

Business Growth through Demand Generation

Lead generation has a ceiling– it can only reach individuals seeking a specific product or service, i.e., ‘plumber Charlotte, NC. In contrast, demand generation acts as a catalyst, expanding the marketing funnel to engage a broader audience by introducing the concept that the product or service exists. While lead generation is constrained to those already expressing a need, demand generation broadens the scope by creating awareness among individuals who may not have been actively looking. Demand generation plays a vital role in business growth despite requiring more time, resources, and effort. It is a strategic investment that, over time, can contribute significantly to a brand’s visibility, customer acquisition, and overall market influence. The comprehensive reach of demand generation complements the targeted nature of lead generation, working together to create a synergistic effect for sustained business success.

The difference between demand and lead generation emphasizes their distinctive roles in crafting a marketing strategy. Using a phased approach, businesses should start with targeted lead generation before integrating the broader reach of demand generation. The “Looking” versus “Seeking” paradigm provides a clear lens for understanding the refined strategies for reaching potential customers. In essence, businesses that recognize the unique strengths of both lead and demand generation are positioned to formulate a powerful and influential marketing strategy.

<a href="https://witgroupagency.com/author/bdegnan/" target="_self">Brittany Degnan</a>

Brittany Degnan

Author

Brittany Degnan is a PR and Brand Manager for WiT Group and works out of the Columbia SC office.
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